Downward Revision In Payroll Levels Expected (2/2)

Analyst opinions eye a downward revision in Wednesday's QCEW:

• StanChart: “Our estimate of the downward NFP revision from Mar-Dec 2022 is about 500k. If we are correct that the birth-death adjustment is overstating employment growth we may see another 150k or so in Q1, so the downward NFP revision from Mar2022-Mar2023 could be around 650k overall. Since NFP is currently estimated to have gone up by 4mn over this period, this is not an overwhelming downward revision, but we expect much of it would be in 4Q22 and 1Q23.”
• Deutsche: “Recently, the implied trend in nominal income growth from the QCEW has followed that of federal withheld income tax receipts. If the relationship between these two series continues to hold, the QCEW could point to a somewhat weaker trend in income growth relative to what the monthly employment report (CES) has shown to date.” Withheld tax receipt growth has been between 0-4% Y/Y in recent quarters vs the 7-8% seen for the CES income proxy.
• Elsewhere, Bloomberg reports JPM estimates the revision will shave nearly 500k off jobs or about 40k fewer per month but still leave average job growth around 300k per month, whilst TD Securities sees downward revisions as not likely to be so large as to suggest a meaningful shift in labor market conditions.